Unsecured Loans and "representative" APR

[quackhandle]

I've recently applied for three unsecured loans with diff banks/companies for "representative" APR of 6.6% or thereabouts. However when it comes back that I've been successful it is no where near 6.6%, more like 9 or even 10% from Santander! (And yet I am already a customer to them) AFAIAA, I have a very good credit history, checked my file a few years back and all was correct. Have not missed a credit card payment (there was a cockup with my virgin cc but got refunded as it was their mistake - can this go against me?) Or is the low rate just to entice us to apply then bank and people still going ahead with the application even thought apr is signif higher?

Not applying for anymore as too many searches on my credit file is going to harm me.

Anyone else found this, ie - successful loan app but no where near the low APR offered?

qh

[v8gaz]

The rates offered are entirely driven by the lenders risk engine model. This will take into accounbt not only your own personal circumstances, but location and other factors that you can't do a lot about.

Clearly at 10% you're a bit dodgy. Thanks for the warning

[gingerjedi]

I don't want to preach but it's best to avoid debt whilst contracting as you are only ever 24 hours/1 week away from having zero income.

I'm talking from my own stressful experience.

[DimPrawn]

Try Zopa, cut out the b(w)ankers!

Borrow money from Zopa lenders - Peer to peer lending with Zopa.com

[MarillionFan]

I don't want to preach but it's best to avoid debt whilst contracting as you are only ever 24 hours/1 week away from having zero income.

I'm talking from my own stressful experience.

Yes but most contractors are willing to work away from home to whit you're not so flexible so it's not a good example.

Try Zopa. Average is around 6-7% at the moment. They'll also grade you so you can see your credit worthiness

[NickFitz]

Or is the low rate just to entice us to apply then bank and people still going ahead with the application even thought apr is signif higher?

That. Almost nobody will get the advertised rate, but the fact that it is in principle available lets them get away with advertising it.

[MarillionFan]

That. Almost nobody will get the advertised rate, but the fact that it is in principle available lets them get away with advertising it.

Speak for yourself. I've always got the lowest rate whenever I've taken loans. You actually build a stronger credit rating by borrowing money and using credit then never using it or owing anything.

[gingerjedi]

Speak for yourself. I've always got the lowest rate whenever I've taken loans. You actually build a stronger credit rating by borrowing money and using credit then never using it or owing anything.

Same here though I doubt I'd have got those rates if they really understood how precarious my situation was.

[quackhandle]

Cheers for the replies, at 10% maybe I am dodgy? Anyone wanna buy a laptop?

I remember the good old days when capital one were inviting "me" to take out their 5.4% unsecured loans. Certainly helped tank out and renovate my basement.

Not heard of that Zopa before, I'll check it out.


qh

[SneakySimon]

Unsecured Loans

I used to work in a credit card company and this was very common to advertise 6.9% but when people apply, then

The other piece is that it depends on the following which is supplied by Experian / Equifax. Electoral register – if your not there, that is bad in banks eyes!
• Any CCJ’s or bankrupts
• Any missed payments / over-limits
• Total debt OS
• Any notes on your file

The data supplied is on a reciprocal basis, so if you are applying to a loan and credit card company, the information they receive from Experian is loans and credit cards only – nothing on a mortgage for example unless you are default on it.

As MarrillonFan points out, if you have no lending then the above info is not available so makes you higher risk as you have no previous form when it comes to lending.

Then the banks made further risk decisions on things you put in your application, such as:
• Home owner / renter (home owners are less risky)
• Age – sub 25 and over 50 are higher risk
• Salary – too low and your high risk as can’t afford to pay, too high and why would you need a credit card
• Number of house moves in last 5 years– someone who moves a lot is riskier
• Type of job – self employed more risky
• Address – live in a dodgy postcode and you are higher risk
• If you request to take out PPI, this actually makes you more risky

Must be remembered that for each offering a company has, they want a certain type of customer. You may be perfect credit history, good pay and job etc but you may not fit the profile they want. We found a perfect customer was bad as they either took out a credit card and didn’t use it much (if at all) or just rate tarted around. It costed us around £55 a month (quite high in the industry) to maintain a credit card for a customer.

With the economic problems of today, the banks are very picky about who they take and the 6.9% is all but for a lucky few now adays!!